X4 Pharmaceuticals, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. X4 is a clinical-stage biotechnology company with no approved products or product-sale revenue; its lead candidate is oral CXCR4 antagonist mavorixafor.
Financial performance and position
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | No product revenue; no license revenue | No product revenue; no license revenue |
| Research and development expense | $61.1 million | $50.6 million |
| Selling, general and administrative expense | $27.0 million | $24.7 million |
| Operating loss | $87.6 million | $85.1 million |
| Net loss | $93.9 million | $88.7 million |
| Net loss per common share | $1.52 | $3.99 |
| Net cash used in operating activities | $77.1 million | $70.9 million |
| Cash and cash equivalents at year-end | $121.7 million | $81.8 million |
| Debt, carrying value | $33.6 million | $33.9 million |
Revenue was $3.0 million in 2020 from an Abbisko license milestone, but none in 2021 or 2022. Profit margins are not meaningful because the company has no product sales and reported operating losses. Operating expenses increased overall by $2.5 million: higher clinical and manufacturing costs drove R&D growth, partly offset by the absence of the $9.8 million goodwill impairment recorded in 2021. Other expense increased to $6.3 million, including warrant-related costs and foreign-currency losses. The 2022 net loss also included a $0.5 million gain on sale of non-financial assets.
Financing activities provided $117.2 million in 2022, compared with $74.2 million in 2021, principally through equity and warrant offerings. Cash, cash equivalents and restricted cash totaled $123.0 million at year-end. Current assets were $128.7 million and current liabilities were $22.3 million. Common shares outstanding rose to 121.7 million from 28.1 million year over year; the filing also reported 111.9 million outstanding warrants and pre-funded warrants at year-end.
Material changes and business developments
- In November 2022, X4 reported positive top-line results from the Phase 3 4WHIM trial: mavorixafor met the primary ANC endpoint and a key secondary ALC endpoint, both with p<0.0001 versus placebo. The company reported no treatment-related serious adverse events or safety-related discontinuations; detailed analyses remained ongoing.
- In September 2022, a Phase 1b study in 25 people with chronic neutropenic disorders reported ANC increases after a single dose; the company said all 14 neutropenic participants reached normalized ANC. X4 began enrolling a Phase 2 study of daily treatment.
- X4 completed its Phase 1b mavorixafor-plus-ibrutinib study in Waldenström’s macroglobulinemia in December 2022. Further oncology development is contingent on a strategic partnership.
- Following a July 2022 strategic reprioritization and an approximately 20% workforce reduction, X4 focused development on mavorixafor for chronic neutropenic disorders, including WHIM syndrome; preclinical programs were paused and oncology programs were limited to partnership-supported work.
- The company raised $55.7 million gross in a July 2022 private placement and $65.1 million gross in a December 2022 public offering. The December offering included Class C warrants accounted for as a liability; their year-end fair value was $23.1 million.
Outlook, liquidity and principal risks
- X4 targeted submission of an NDA for mavorixafor in WHIM syndrome in early the second half of 2023, seeking U.S. use in patients aged 12 and older. It expected to report chronic-neutropenia Phase 2 results and provide more detail on a potential Phase 3 program in the second or third quarter of 2023. These are historical management expectations, not assurances of outcome.
- Management stated that year-end cash was expected to fund operations into the second quarter of 2024, but projected a breach of the debt facility’s minimum-cash covenant in the first quarter of 2024 without additional financing. The filing concludes that substantial doubt exists about the company’s ability to continue as a going concern for at least one year after issuance of the financial statements. The auditor’s opinion was unqualified and separately highlighted this going-concern uncertainty.
- In January 2023, after year-end, X4 amended and restated its Hercules loan. The $32.5 million facility carries interest at the greater of 10.15% or prime plus 3.15%, with interest-only payments through September 2024 and scheduled principal payments beginning October 2024; specified conditions could extend the interest-only period and maturity. The facility requires at least $20 million of cash, reducible to $10 million after specified FDA approval conditions, and is secured by substantially all assets other than intellectual property, subject to the agreement’s terms.
- Further financing may be needed and could dilute shareholders, impose restrictive terms, or require licensing rights. X4 has an ATM program with up to $50 million of offering capacity and a Lincoln Park purchase agreement with up to $50 million of capacity, subject to limits and conditions.
- Key operating risks include dependence on mavorixafor, uncertain FDA review and commercialization, limited rare-disease patient populations, clinical-trial execution, reimbursement and pricing uncertainty, and reliance on single-source manufacturers for drug substance and finished capsules. The company also faces potential dilution from warrants and equity awards.
Important facts for investors to verify
- Whether the completed Phase 3 WHIM data support the planned NDA, and the actual filing, review and decision timeline.
- Cash burn, financing needs, and compliance with Hercules’ minimum-cash covenant; confirm the effects of the January 2023 loan amendment.
- Potential dilution from the substantial increase in shares outstanding and the large warrant and pre-funded-warrant balance, including warrant settlement terms.
- Enrollment, durability, safety and results of the chronic-neutropenia Phase 2 study, and the scope and funding of any subsequent Phase 3 program.
- Manufacturing capacity and continuity, including renewal or replacement of the sole-source supply agreements and the commercial readiness of supply.
- Whether WHIM prevalence estimates and future reimbursement assumptions translate into an addressable, commercially viable market.